NZF Money wins extension of freezing order against troubled parent NZF Group

Friday 27th April 2012

NZF Money, a failed unit of troubled finance company NZF Group, has won an extension to a court order freezing $3 million of assets of the parent, which is in talks with its trustee about a debt-for-equity swap as cash reserves dwindle.

NZF Money was put into receivership by its trustee last July, owing investors about $16.4 million. NZF Money’s receivers claim the parent bought its Home Loans Division for a penny price of $1,000 and then sold most of it to Resimac in September.

The action by receivers KordaMentha is against the parent and also five directors during the time of the transaction including Peter Huljich. It argued successfully that there was a risk the $3 million would dissipate before the NZF Money could make a claim.

Last month NZF Group said it can meet interest payments on capital notes due in the next 18 months but has started talks with trustee Perpetual Trust “regarding the payment of interest and conversion to equity.”

NZF Group “did not expect to have sufficient cash between March 2012 and the date the capital notes mature in 2016 to fully redeem them for cash, meaning that in all likelihood the notes would convert to equity,” according to an oral judgment of Judge David Collins in the High Court in Auckland.

Collins had “grave doubts about the ability of NZF Group to meet any judgment which NZF Money may in due course obtain for the ultimate benefit of those members of the public who invested in NZF Money.”

NZF Money’s investors would benefit by the $3 million, which would amount to a boost of 15 percent to 20 percent of the funds available, the judge said.

The parent company can spend money on legal fees and payments made in the ordinary course of business, according to an amendment to the order.

BusinessDesk.co.nz

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